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etfs

Canadian ETFs continued their strong start to 2022 with $3.9 billion in net flows in February. Equities were the dominant asset class once again, representing 80% of the total new money. Broad market Canadian equity funds saw the highest inflows among the equity asset class, whereas financials and technology sector ETFs recorded net outflows of $195 million and $146 million, respectively.

The demand for cash alternative ETFs remained high during the month of February. Horizons Cash Maximizer ETF (“HSAV-T”) recorded the 5th largest inflow among all ETFs in Canada. Meanwhile, Canadian aggregate bonds ETFs had the largest outflow within the fixed income category.

Commodity ETFs had net outflows of $49 million in February, making it the only asset class that has shed assets year to date. Even though precious metal prices have surged in recent weeks amid geopolitical and inflation concerns, investors have shied away from gold and silver bullion ETFs.

During the month, Horizons became Canada’s first ETF provider to launch a carbon credits ETF. The fund provides exposure by investing in carbon credit futures contracts. Carbon credits act as permits issued by regulatory organizations that are designed to offset and cap a participant’s greenhouse gas emissions. As the trend towards regulating global carbon emissions grows, investors are eyeing the anticipated rising demand and potential diversification benefits from this type of asset class. Ninepoint Partners followed suit and released their own carbon credits ETF, which listed on the NEO exchange.

Two new issuers joined the market in February, bringing the total number of Canadian ETF providers to 42. One of these new players is Evermore Capital Inc., which launched their suite of target date retirement ETFs on the NEO exchange. Depending on each fund objective, the ETF will invest a diversified mix of broad market equity and fixed income ETFs from external providers. As the retirement date approaches, the funds will change their target asset allocation in order to reduce volatility, making this a much more hands-off approach to retirement investing. The Evermore Retirement ETFs charge a direct management fee of 0.35%.

Investors who are looking for higher yield in a rising rate environment will be glad to hear that several covered call ETFs were among the latest crop of launches. This strategy involves writing covered call options on a portion of the portfolio securities in order to provide steady income and mitigate downside risk. The Evolve Canadian Banks and Lifecos Enhanced Yield Index ETF (“BANK-T”) and the Mulvihill Canadian Bank Enhanced Yield ETF (“CBNK-T”) provide exposure to Canadian banks and insurers, while adding 25% cash leverage to enhance yield and return potential. Meanwhile, the Harvest Diversified Monthly Income ETF (“HDIF-T”) and the Hamilton Enhanced U.S. Covered Call ETF (“HYLD-T”) invest directly in a mix of U.S. equity covered call ETFs.

First Trust completed the previously announced redesignation of all outstanding advisor class units into common units for the ETFs listed below.

Launches

TICKERNAMEASSET CLASSSUBCATEGORIESRISK RATINGINCEPTION DATEMGT. FEE
BANK-TEvolve Canadian Banks and Lifecos Enhanced Yield Index ETFEquityCanada, Covered CallLow to Medium2/1/20220.60%
QEE-TMackenzie Emerging Markets Equity Index ETFEquityEmerging MarketsMedium2/7/20220.22%
HYLD-THamilton Enhanced U.S. Covered Call ETFEquityU.S., Covered CallMedium to High2/7/20220.65%
HYLD-U-THamilton Enhanced U.S. Covered Call ETFEquityU.S., Covered CallMedium to High2/7/20220.65%
CARB-THorizons Carbon Credits ETFAlternativeGlobalHigh2/9/20220.75%
ZBI-TBMO Canadian Bank Income Index ETFMulti-AssetCanada, FinancialsLow2/9/20220.25%
NSSB-TNBI Sustainable Canadian Short Term Bond ETFFixed IncomeCanada, ESGLow2/9/20220.25%
HDIF-THarvest Diversified Monthly Income ETFEquityGlobal, Covered CallMedium2/16/20220%*
CBON-NENinepoint Carbon Credit ETFAlternativeGlobalHigh2/16/20220.75%
CBON-U-NENinepoint Carbon Credit ETFAlternativeGlobalHigh2/16/20220.75%
ERCV-NEEvermore Retirement 2025 ETFMulti-AssetGlobal, Target DateLow2/23/20220.35%
ERDO-NEEvermore Retirement 2030 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
ERDV-NEEvermore Retirement 2035 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
EREO-NEEvermore Retirement 2040 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
EREV-NEEvermore Retirement 2045 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
ERFO-NEEvermore Retirement 2050 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
ERFV-NEEvermore Retirement 2055 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
ERGO-NEEvermore Retirement 2060 ETFMulti-AssetGlobal, Target DateLow to Medium2/23/20220.35%
CBNK-TMulvihill Canadian Bank Enhanced Yield ETFEquityCanada, Covered CallMedium to High2/25/20220.65%
TECE-TEvolve Enhanced FANGMA Index ETF (CAD Hedged)EquityU.S., Tech, LeveredMedium to High2/28/20220.50%
TECE-B-TEvolve Enhanced FANGMA Index ETF EquityU.S., Tech, LeveredMedium to High2/28/20220.50%
TECE-U-TEvolve Enhanced FANGMA Index ETFEquityU.S., Tech, LeveredMedium to High2/28/20220.50%

Source: Inovestor

*The ETF invests in underlying ETFs that charge a direct management fee, and as a result, pay an indirect management fee.

Terminations

TICKERNAMEASSET CLASSSUBCATEGORIESRISK RATINGTERMINATION DATEMGT. FEE
FDE-A-TFirst Trust AlphaDEX Emerging Market Dividend ETF (CAD-Hedged)EquityEmerging Markets, DividendHigh2022-02-281.65%
EUR-A-TFirst Trust AlphaDEX European Dividend Index ETF EquityEurope, DividendMedium to High2022-02-281.60%
FST-A-TFirst Trust Canadian Capital Strength ETFEquityCanada, Multi-FactorMedium2022-02-281.60%
FUD-A-TFirst Trust Value Line Dividend Index ETF (CAD-Hedged)EquityU.S., DividendMedium2022-02-281.70%
FSL-A-TFirst Trust Senior Loan ETF (CAD-Hedged)Fixed IncomeU.S., High YieldLow to Medium2022-02-281.35%
ETP-A-TFirst Trust Global Risk Managed Income Index ETFMulti-AssetGlobalLow2022-02-281.10%

Source: Inovestor

Ben Kleinberg is Product Manager at Inovestor